Common Exclusions Under Commercial Property Insurance

If your business owns any sort of property, you will need commercial property insurance. This type of coverage is offered to businesses across industries and sizes in order to protect your company’s physical assets. insurance paperwork with red colored pencil pointing to the word insurance

insurance paperwork with red colored pencil pointing to the word insurance

Your commercial property insurance policy will cover most of the hazards likely to befall your place of business, but it won't cover everything. There are some common exclusions that you will find in more policies than not. It is important to be aware of these exclusions and ask your insurance agent about adding coverage to fill in the gaps of your policy.

Flooding
Just as with home insurance, your basic policy isn't going to cover floods. You can invest in a commercial flood insurance policy to help cover the gap, of course.

Earthquakes
This is similar to the scenario with flooding. Most home policies do not cover earthquakes. The same goes for most commercial property policies. Again, you can invest in an additional policy to bridge the gap.

Commercial Auto Accidents
Your commercial property insurance policy may cover the store, the warehouse and the office. But it's not going to cover your autos. Insuring vehicles and insuring buildings are two completely different things. Sometimes, a company outfitted to do one might not even be equipped for the other. You might be able to buy commercial auto and property insurance as part of the same package, but they're going to be two separate policies.

Equipment Breakdown
Insurance is intended to cover things that might happen. Equipment breakdown is something that certainly will happen. So, you may find that while your insurer is more than willing to buy you a new pizza oven when yours is damaged in a fire, they're not going to pay for a new one just because the old one is getting on in years. Equipment breakdown is not a risk to be managed. Instead, it’s something that is just about guaranteed to take place over time.

There may be other exclusions that apply based on your industry, where you live, and who you're buying insurance from. Take the time to read through your policy, ask your insurer any questions you might have, and don't make the mistake of simply assuming something is covered.

Damage to Unowned Property
Say that an accident occurs in your restaurant and a customer’s property is damaged due to a fire. This will not be covered under your business’ commercial property insurance, as the customer’s belongings are not owned, used or rented by your business. Instead, the damages would have to be covered under a general liability insurance policy.

How to Make Up for Gaps in Your Commercial Property Insurance Policy
Thankfully, there are a lot of insurance policies designed to cover the gaps left by other policies. Ask your insurance agent about different coverage once you have evaluated the physical property that you want insured.

Additional insurance to consider for your business includes:

Commercial Auto Insurance: Commercial auto insurance covers vehicles owned or used by a business for work purposes. These policies often include coverage such as comprehensive coverage, collision coverage, liability, medical payments coverage, uninsured/underinsured motorist and more. Also consider adding Hired and Non-Owned Auto, which covers vehicles borrowed or rented by the business for work purposes.

Inland Marine Insurance: Inland marine insurance covers items and equipment that are damaged in transport. If you are transferring equipment from one office to another, this insurance can help cover damages the equipment may suffer before arriving.
Equipment Breakdown Insurance: Equipment breakdown insurance covers the sudden and unexpected breakdown of equipment, including emergency repairs or replacements.
Crime Insurance: Crime insurance covers loss due to theft by an employee. If one of your employees steals or embezzles money from the company, crime insurance can help compensate your business for the loss.
General Liability Insurance: General liability insurance covers claims of bodily injury, property damage and personal or advertising injury against your business. This can cover damages to other people’s property that occurs as a result of the business’ everyday activity.

It is also recommended that you bundle your commercial property insurance with other policies such as those above. You can do so by investing in a business owners policy. A business owners policy (BOP) combines general liability and commercial property insurance into a flexible package to protect small businesses in a low risk industry. You can add and adjust coverages as needed to fill in the gaps left by your commercial property insurance.

Common Exclusions Under Commercial Property Insurance

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